Applause, but no room for complacency

After 18 months,
Leighton
chief executive
Hamish Tyrwhitt
can finally pause for breath. A year ago, the CEO, who was parachuted in from Asia in mid-2011 to replace
David Stewart
, appeared to have underestimated the extent of the turnaround needed to tackle Leighton’s sloppy risk management and bloated balance sheet.

Investors were shocked by fresh writedowns after Tyrwhitt promised they had seen the end of them.

But 12 months of hard work under the close scrutiny of Spanish owner ACS, which now has an executive on Leighton’s board, have paid off, with investors genuinely impressed by improving cash flow and lower debt.

While Tyrwhitt and chief financial officer
Peter Gregg
deserve credit for getting the contractor back on track, they cannot afford to be complacent. The contracting market is becoming increasingly competitive as the resources boom moderates, and Leighton’s underlying profit margins – now just 1.9 per cent – remain under pressure.